FinCEN Notice 2016-1, FBAR Requirement for Certain Financial Professionals Released
The Financial Crimes Enforcement Network (FinCEN) has issued a Notice extending the FBAR filing due date to Apr. 15, 2018 for certain individuals with signature authority over but no financial interest in one or more financial accounts.
This extension is the latest in a series of identical extensions over the past few years, and it applies to the reporting of signature authority held during the 2016 calendar year, as well as to reporting deadlines extended in prior FinCEN prior notices.
FBAR reporting exemptions currently exist for officers or employees of certain federally regulated entities (e.g., a financial institution registered with and examined by the Securities and Exchange Commission) where they have signature authority only and no financial interest in the foreign account. FinCEN has received numerous requests to extend this exemption to cases where officers or employees have “overlapping” signature authority resulting from their having signature authority over both a parent entity’s and its controlled subsidiary’s foreign financial accounts.
Under the current rules, a U.S. person with a financial interest in 25 or more foreign financial accounts or with signature or other authority over 25 or more foreign financial accounts is only required to provide the number of financial accounts and certain other basic information on the report (the “25-or-more rule”), and have available more detailed information to provide upon request, like an account number or the name of the financial institution, as opposed to filing a separate FBAR for each account.
Back in March, FinCEN issued proposed regs that would revise and clarify certain FBAR filing provisions. Among other changes, the proposed regs would provide a new simplified and expanded exemption that would eliminate the requirement for officers, employees, and agents of U.S. entities to report on accounts owned by the entity over which the officer, employee, or agent has signature authority solely due to their employment when those accounts are already required to be reported by their employer, or any other U.S. entity within the same corporate or other business structure as their U.S. employer.
This would also address instances in which employees have overlapping signature authority with respect to U.S. parent and subsidiary accounts within the same corporate or other business structure. To maintain transparency with respect to U.S. persons eligible for this exemption, employers would be required to maintain information identifying all officers, employees, or agents with signature authority over, but no financial interest in, those same accounts, which would have to be maintained for five years and provided to FinCEN upon request.